City Journal

Richard Miniter
New York's Needless War Over Water
When Federal Regulations Go Too Far
Winter 1994

New York has the cleanest municipal drinking water in the United States—but the Federal Government wants the city to spend billions of dollars cleaning it up.

Environmental Protection Agency regulations based on 1986 amendments to the Safe Drinking Water Act require the city to filter its water supply near its source. The fiscally strapped city estimates it would have to make at least a $4 billion capital investment to build the kind of filtration system the EPA has in mind, and spend an additional $800 million a year operating and maintaining it. (The current water and sewer capital budget is some $10 billion over ten years, the annual operating budget $650 million.)

The city has an alternative: state law gives it the authority to prevent water pollution by imposing draconian land-use and other regulations throughout the watershed, a vast area covering more than 1,900 square miles in eight upstate counties. Doing so would allow New York to win a waiver from the federal filtration requirement, but it could also devastate the upstate economy and leave the city open to billions of dollars in lawsuits.

The federal mandate that has forced this choice on the city is not only costly but unnecessary. Ninety percent of the city’s water comes from unpolluted sources west of the Hudson River, where there is little danger that overdevelopment will foul the water supply.

Battle for the Land

New York City’s watersheds, which feed the city’s 12 upstate reservoirs and 3 controlled lakes, are the source of almost all of the city’s water. Some seven million city dwellers and two million upstate residents—almost half the state’s population—rely on the city’s water system.

The city’s water comes from two distinct sources. The first, the Croton watershed, is located cast of the Hudson River in Westchester, Putnam, and Dutchess counties. Its reservoirs are encircled by suburban development and bridged by major highways. Water quality has declined as the population has surged and road salts, auto pollution, runoff from septic systems, and other pollutants have taken their toll. The Croton water, which accounts for about one-tenth of the city’s supply, is and must be extensively filtered.

But the rest of the city water supply, the Catskill and Delaware watersheds, is in a far less developed area, straddling five counties west of the Hudson and farther north than the Croton system. “The Catskill/Delaware water is of very good quality,” according to a 1991 publication of the New York City Department of Environmental Protection (DEP). The department’s commissioner, Albert Appleton, has called it “the champagne of drinking waters.” Big Indian Spring Water corporation, a privately held concern that markets bottled water throughout New York state, draws its water from the same watershed as the city—and has no problem selling it in a highly competitive market. The city’s water system works well: New York’s tap water may be purer than most bottled water, according to a recent state Department of Health study.

City and federal regulators and environmentalists, however, argue that the Catskill and Delaware watersheds are in danger of becoming overdeveloped and polluted just as the Croton system has. “The city is eager to maintain the excellent quality of the Catskill and Delaware reservoirs, which the experience of the Croton system has shown is impossible without a strong watershed management program,” declared the 1991 DEP report. In a meeting the same year with local officials from the Catskill/Delaware region, city engineers argued for a tough regime of land-use controls. They relied exclusively on data from the polluted Croton system to justify regulating the rest of the watershed.

But the comparison between the Croton and the Catskill/Delaware watersheds is a false one. City officials have never argued that Catskill and Delaware water is threatened with imminent contamination. Water quality has improved dramatically over the past twenty years, despite a small rise in population, because of reductions in fertilizer runoff from farms, the modernization of upstate sewage facilities, and existing state and federal environmental regulations.

There is every indication that the quality of Catskill/Delaware water will continue to improve. The city still owns large buffer areas around open-air water supplies in the Catskills. (The Croton buffers were sold off, at a considerable profit, during the suburban housing boom of the 1950s and 1960s.) Nor is there much likelihood that the area will become densely populated. The point of the Catskill/Delaware water system nearest to the city, in northwestern Ulster County, is at least a three-hour drive away—making it an unlikely new home for commuters. The area is largely devoid of heavy industry that might pollute the water. Aside from light manufacturing along the west branch of the Delaware River and some state colleges, the region’s economy is based mostly on farming, tourism, and recreational activities like skiing and fishing. It has an obvious financial stake in maintaining its rustic character. Thus, given the high quality of the city’s water and the remoteness of its source, Congress’s well-intentioned attempt to preserve water quality has turned into an effort to avert a disaster that almost certainly would never happen.

The Federal Government’s water-quality mandates have created a conflict between the city and the watershed region. Generally upstate officials favor filtration, for which the city would bear the vast bulk of the cost. The city, meanwhile, is pursuing the regulatory option; it has applied and won conditional approval for a waiver of the filtration requirement. The city has also announced plans to condemn ten thousand acres, for which it plans to pay the owners $440 per acre, well below market value. Upstate officials accuse the city of exaggerating the costs of filtration. The city, likewise, claims upstaters are overstating the effects of the regulations needed to win a waiver. In any case, it is clear that either option would be quite costly.

At the center of the conflict is Delaware County, more than half of which is within the city’s watershed. Some 24,000 county residents own most of the 772-square-mile area that makes up the county’s share of the watershed. The city’s rules would impose a host of burdens on the citizens and local governments of Delaware and nearby counties. They would prohibit property owners from enlarging their buildings or parking lots, reduce property values, and increase the cost of government services. They would also “devastate the agricultural industries of Delaware County” and lead to tax increases, according to a report by Kenneth Markert, director of the county’s Planning Board, and William Moon, the county’s commissioner of social services.

Private Costs

Many of the city’s proposed regulations are stunning in their breadth and complexity, given the minor effects the regulated activities generally have on water quality.

The regulations call for five-hundred-foot setbacks from “watercourses.” New York City defines a watercourse as any body of water (except drainage ditches that temporarily transport storm water runoff) or any depression, natural or man-made, that carries at least one cup of water per minute. Watercourses may be of any size.

Within the setback area, no development or change in the use of land could occur without a city permit. That means that the presence of a small brook would prevent development on a stretch of land more than a thousand feet wide; a meandering stream would take in even more nearby land. Delaware County alone has some seven hundred miles of trout streams, so some 15,100 acres of land would be effectively condemned. Assuming a value of $1,000 per acre, about average in that rural county, the loss of that land is estimated at more than $15 million.

The definition of a watercourse is sufficiently vague that it could take in a lot more than trout streams. Watercourses also include man-made ponds, which are common in upstate orchards and livestock ranges. A liberal definition of watercourses would take in almost all of the watershed area, perhaps 1,500 square miles.

And a host of land-use restrictions could adversely affect farmers. No manure or fertilizer could be stored within five hundred feet of a watercourse or spread on a field within one hundred feet. No barnyard drainage would be allowed to enter a watercourse, and berms, earthen bulwarks that hold back runoff, would be required around all pastures. The combination of these regulations would put 75 percent of the watershed’s farms out of business, according to the Coalition of Watershed Communities, a group of local government officials from the 36 towns and five counties of the Catskill and Delaware water systems. Again, the city contends that these costs are overstated by upstate government officials, but the magnitude is definitely on target.

Cemeteries could not be built or expanded within five hundred feet of a watercourse. Since there are very few plots of land that are large enough for a cemetery and far enough away from a watercourse, watershed residents would probably have to bury their dead elsewhere. This cost cannot be fully measured in dollars; some family plots in those communities go back to the American Revolution.

Selling land within setbacks or areas otherwise subject to water quality regulations would require the city’s approval. Potential owners might have to win approval from the city to use land for any commercial purpose. The pace of new construction would be set by the speed of the city’s permit process, which is not expected to be rapid. There is no requirement that the city’s review board act on variances in a timely manner or according to any timetable at all. Given the relatively short construction season in upstate New York, a slowdown of even a few months—not unusual in the case of land-use permits—could delay a project by a year and create a host of new expenses that could make it uneconomical. Even landowners who can afford to wait would face higher construction bills, as the review board calls for additional tests, studies, and design modifications. To win a variance, a landowner might have to hire a soil scientist, a hydrologist, a licensed engineer, or an environmental lawyer. Each of these professionals would add to the cost of development.

The city’s proposed regulations regarding “impervious surfaces”—bureaucratic argot for rooftops and paved areas—are particularly onerous. Impervious surfaces would be strictly limited to no more than 2,500 square feet or 10 percent of the lot area, whichever is greater. (Multiple parcels that are contiguous and have a common owner would constitute one lot for purposes of the regulation.) This rule would disproportionately harm small property owners in commercial areas, where parking lots take up most of the property. Large parking lots are needed throughout the watershed because residents are widely dispersed and rely on their cars to get around. And since most of the commercial space in upstate communities already meets or exceeds the city’s 10 percent limit, many businesses would soon discover that the only direction they can move is up. In Delhi, a town of three thousand near the center of Delaware County, half of the downtown area and the main shopping plaza would not be permitted to expand their parking lots or add new stores.

The regulations would impose other costs on the use of automobiles. Any place where cars, trucks, or buses are routinely washed would have to install new wastewater purification systems. Schools that wash buses or firms that wash their trucks would be forced to pay tens of thousands of dollars for new equipment.

Any site where there are more than four unregistered motor vehicles in some state of disassembly is considered a “junkyard” under the proposed regulations. Since junkyards would not be permitted within five hundred feet of a watercourse, many of the “parts cars” mined by thrifty upstaters; to repair their working vehicles would have to be towed away.

Gas stations and other places that store more than a “household supply” of motor fuel would have to be at least five hundred feet from a watercourse. Such facilities would have to prepare a detailed water supply protection plan.

The combination of a new layer of permits with a new layer of land-use controls, atop existing town and county regulations, would make usable land scarcer and more expensive, development more risky, and business expansion less common. Land subject to such regulations would decline drastically in value, depriving its owners of much of their investment.

The city’s regulations may have other, indirect costs. “You might want to consider suing your neighbor because it is his stream that is causing your property to be governed by the city, and thus losing potential value at resale time,” suggests a flier distributed by the Coalition of Watershed Towns. And the same public health law that gives the city the power to regulate also gives affected property owners the right to sue for “just and adequate compensation.” Residents may spend thousands of dollars suing each other and the city hoping to recover damages.

Public Costs

The city’s regulations would also impose substantial financial burdens on town and county governments. Sewage treatment plants would have to be upgraded to meet the city’s requirements. The total cost of such improvements is hard to estimate, given the diversity in age and type of plant used throughout the watershed. But the Coalition of Watershed Towns estimates that the cost of upgrading the plants would average about $1 million per facility and that new plants, which would be required in some areas, would cost about $2 million each—a steep outlay for a small town or county government.

The regulations would forbid landfills within a thousand feet of a watercourse. Existing landfills may have to be closed and new sites found, a long and costly process. Delaware County’s interim landfill would probably have to be moved, at a cost to taxpayers of $5.8 million over three years. County officials have not yet estimated the cost of future trash disposal in the light of the city’s regulations.

Town and county highway departments might also have to change the way they make winter roads safe. These departments would have to stop spreading cinders on icy roads and use sand instead, increasing the number of claims made by motorists whose cars suffer damage from clumps of hard sand and small rocks sprayed by highway trucks. The proposed regulations also mandate certain formulas for mixing sand and salt for roadway use. Measuring, mixing, and training personnel in the new procedures would increase costs for watershed highway departments. Further, new salt storage requirements could cost as much as $1.8 million per year in Delaware County alone.

More than money is at stake. By changing the way road crews remove ice and snow, the city may be risking public safety in order to reduce salt-laced runoff. Sand is not as effective as cinders in protecting motorists on icy roads. Injured motorists might sue watershed counties, leading to costly settlements or court judgments as well as higher insurance premiums for local governments.

The city’s land-use regulations would also shrink the watershed’s tax base, though precisely how much is hard to estimate. The regulations would cause what assessors call a “loss of ratables”: by limiting the permitted uses of land, they would drive down property values, and hence property tax revenues. This would compel some towns to reduce government services, cut spending, or hike property tax rates to make up the shortfall. Any of these alternatives could spur another drop in property values, creating a vicious cycle.

From the perspective of local governments, vacant land on which development is completely forbidden is essentially a dead loss from the tax base. How much land would be subject to this severe measure is unknown, but educated guesses can be made. Initially the city planned to spend $230 million acquiring “environmentally sensitive” land throughout the watershed. Because of budget constraints, the city reduced this planned expenditure to $70 million. If the remaining $160 million worth of land is instead simply taken through regulation, the annual loss to the watershed tax base would be at least $1.6 million per year.

The city may ultimately be forced to absorb many of these costs. Putnam County, which is in the Croton watershed, has filed suit in New York Supreme Court, seeking to require that New York City either build the federally mandated filtration plants or pay the county $6 billion in compensation for lost revenue.

Some watershed county planners have suggested an unusual compromise called “whole community planning.” The city would regulate land use sufficiently to satisfy federal water purity standards but delegate enforcement to local governments, which would be less likely to do unnecessary harm to the upstate economy. The plan also calls for “cost sharing,” under which the city would fund an economic development program for upstate Counties that could cost tens of millions of dollars. Since some of the development money would be used to attract new businesses to the watershed area, the city would, in effect, be paying to lure firms from the city upstate.

A Way Out?

The predicament in which the city and upstate localities find themselves is the result of a well-meaning federal effort to ensure water quality. But the Federal Government failed to take New York’s unique circumstances into account.

Of the 25 largest U.S. cities, only New York and Boston do not already filter their water near its source. (Boston is exempt from the filtration requirement because its entire watershed is pristine.) New York has an extensive water quality system that is well-run and provides the city with safe, clean water. Even “marginal” water reaching the city meets all federal source water and disinfecting requirements all the time. Indeed, city standards meet or exceed those of most filtered systems. The entire case for filtration rests on speculation about future contamination.

Since there is no immediate threat to the city’s water quality, New York’s congressional delegation should press their colleagues to pass legislation exempting New York from the filtration requirement. If Congress does not do this, it should, in the interest of fairness, provide the city with the funds necessary to pay for the mandated filtration.

If the city goes ahead with its plans to regulate the watershed, it should limit the harm to the upstate economy by making several commonsense changes in its proposed rules. “Watercourse” should be strictly defined to include only significant sources of water, such as rivers and streams, not minor flows. The city should provide a map clearly delineating what is regulated and what is not. The exact amount of setback from a watercourse should be determined by existing soil conditions, not the one-size-fits-all bureaucratic standard of five hundred feet. Certain small changes in land use, like adding a driveway or a small septic system, should be automatically permitted. And land uses that do not pose grave risks to the watershed, such as cemeteries, should be grandfathered into the existing rules.

The city should also give upstate residents a voice in determining the regulations. Currently proposed rules allow the city’s Department of Environmental Protection to change the criteria that it uses to approve variances at any time, without notice. Further, the board that makes such decisions is to be made up entirely of city DEP officials. What is needed is a neutral board, composed partly of city officials and partly of watershed representatives, that would vote on the rules in public hearings and grant variances in a fair, orderly, and timely manner.

Finally, New York should drop its heavy-handed rule that would allow city enforcement agents to search “all watercourses” at any time “without fee or hindrance.” It is a practice the city can do without, save in extraordinary circumstances in which it should ask a local judge for a search warrant.

Small changes in the management of the Catskill/Delaware watershed could also improve water quality. Moving the intake valve in the Cannonsville reservoir, for example, would allow more sediment to settle before water is piped to the city. A full review of the city’s water systems would probably reveal a host of other minor improvements that could increase water quality.

Even with these modifications there is sure to be rankling over water quality regulations, because, in a sense, both sides are right. The cost of complying with regulation is too high for the watershed communities to bear and the cost of filtration too great for the city. The Federal Government should correct its error, sparing New York City and its upstate neighbors from this expensive and unnecessary mandate.

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